×
Menu
Search
HomeNewsForum Selection Clause in Disability Plan Held Unenforceable

Forum Selection Clause in Disability Plan Held Unenforceable

Chicago area employees with coverage under an employer-sponsored long-term or short-term disability plan may be surprised to find out that when drafting the plan, their employer inserted a clause purporting to require that you have to file your lawsuit in a distant state if your claim is denied and you have to sue for your benefits. In fact, the Department of Labor has filed briefs in cases opposing such clauses, noting there is a “disturbing trend” among employers to place such clauses in their plans. In Chicago, one court put a stop to that trend in a case I am handling.

In Coleman v. Supervalu, Inc., No. 12-7064, 2013 U.S. Dist. LEXIS 13372 (N.D. Ill. Jan. 31, 2013), Ms. Coleman sued Supervalu because its claims administrator denied her claim for disability benefits. After she sued, Supervalu moved to dismiss the lawsuit, citing a provision in the plan that purports to require any employee covered by the plan to bring the lawsuit in Minnesota, where Supervalu is headquartered. Virtually every court to consider whether such a clause is enforceable has concluded it is, and the employee can be forced to bring a lawsuit for benefits where the employer is headquartered. The court in Coleman, however, disagreed. Relying on the legislative history and an appellate court case that acknowledged choice of venue was meant to be a participant right, the court held ERISA prohibits the plan administrator from stripping a participant of the right to choice of venue.

With regular contracts, parties are free to negotiate and agree to virtually whatever terms they like. But when employers establish ERISA plans, they do not do not start with a clean slate as with a garden variety contract. They establish the plan subject to all of ERISA’s requirements, which cannot be waived. One of those provisions is a participant right to a wide selection of venue for a potential dispute. Congress gave participants a broad choice of venue in 29 U.S.C. § 1132(e)(2), which allows a lawsuit to be brought where the plan is administered, where the denial of benefit occurred, or where any defendant can be found. Courts that have upheld these forum selection clauses in plans have done so primarily because the clauses require litigation to take place in the home venue of the employer, or where the plan is administered, thus appearing to meet the requirements of the statute. But in Gulf Life Insurance Co. v. Arnold, the Eleventh Circuit explained that ERISA’s broad venue provision was intended to be a sword wielded by participants and beneficiaries, not by plan administrators. ERISA’s legislative history is consistent with the concern.

If you have a claim for benefits, and your employer’s plan contains a forum selection clause, call an experienced ERISA attorney today.

Share Post on:

CATEGORIES:

ARCHIVES:

Recent Posts:

How can we help you?

We’d Like to Learn About Your Case and
Determine How We Can Execute Our Strategy for Success©